Oil Producing Countries Considering Hiking Prices Of Oil
At a recent meeting of Oil Producing & Exporting Countries (OPEC) in Algiers, Russian President Vladmir Putin suggested that there should be a temporary freeze on the oil output of all Oil exporting countries. Just the mere suggestion by President Putin has led to an increase in Oil prices.
Oil prices have been steadily dropping for the last couple of years due to a sudden increase in the supply of Oil. This was prompted by a rapid increase in production by oil producing countries. The prices per barrel have now reached a $50 a barrel. Countries like Russia, Iran & Venezuela depend heavily on the export of oil for all their expenditures. A rapid reduction in oil prices has wrecked their national budgets as they now have very few Dollars flowing in as compared to the same time a few years ago. For example Venezuela is facing a crippling shortage of all basic necessities like soaps, toilet paper, and groceries. Russia is also in a similar situation, but their situation is not as grave as Venezuela.
Countries like Oman, Kuwait, Bahrain & Saudi Arabia can manage their budgets as they have a lot of foreign reserves to ward off all such crises. The second fallout of falling oil prices is the rapid decline of the oil fracking industry in the United States of America. Oil fracking companies need to get a price per barrel of $60 to stay afloat. With the prices being below that threshold, these companies are shutting down rapidly in the USA.